Sushi Money

Some excellent personal finance and investing articles out there this week.  CNN/Money’s Walter Updegrave replies to an anxious investor while discussing Investing for the Long Haul.  Can’t say it any better than that right now, and so much of investing depends upon your time horizon.

If you’re really anxious, the government has just the thing on April 7th when you can invest in all kinds of Treasury securities in amounts as little as $100.  You can do that through a broker of course, but it may cost less by going right to the source at treasurydirect.gov.

Still working on taxes?  The IRS released its list of the Top 2008 œDirty Dozen Tax Scams this month.  Peace of mind with taxes really helps, and it’s always nice to know what to look out for.

Even though the markets have looked pretty good over the last week, don’t expect the volatility to ease anytime soon.  MSN’s Jim Jubak takes a thorough look at the challenges impacting global market stability and some Safer Ports in the Market’s Storms.  

Of course if you want to become anxious again, he presents a hard dose of reality in Retirement Crisis: From Bad to Worse.

But there’s nothing like a little Zen Economics to help you relax, and make you wonder if you really know anything at all. 

Working with a financial professional can be very helpful.  Whether that’s a Financial Planner or simply a local broker, do some homework and make sure you’re comfortable with the relationship.  A good planner can make all the difference however, especially with a longer time horizon. 

Awoke to a cold spring morning today with blue skies and sunshine. It would be nice if it were all blue skies for the economy and markets, but there’s still a lot of uncertainty out there. Does it seem like we’re reading more and more about recession paranoia in the media these days? Maybe recession-speak is now fashionable, but perhaps also because of the election cycle. As some economists observe, one way to create a recession is to just keep talking about it. Hmmm, interesting observation about sex there…

Many American consumers are feeling pinched these days. The Fed has aggressively cut rates in the face of many economic challenges, yet some investors are worried about the Fed causing more inflation. The inflation argument may be valid down the road, but it doesn’t sit well when we’re trying to tackle the other economic problems first. Seems like you slay the dragon in front of you before worrying about the one coming next.

All I know is I can bring more certainty to our own life through doing more things that improve financial stability, and doing less things that reduce it. Stuff like increased savings, reduced spending and debt, and becoming more knowledgeable about financial matters. Honestly I can control very little except the conduct of my own life, and even that is arguable at times.

Yet because most of us care about the nature of our life situation in the future, we do something about it. We modify behavior in the present in order to cause change for the future. Or at least we try to do that. Sometimes we fool ourselves for quite a few years, going through the motions, but not really being serious about it.

And then it hits. Some event, realization or dynamic in our lives that induces enough reflection to become aware of our mortality. For many of us it’s hitting the age of 40. Maybe like that keystone analogy and the poll results that shows how people take retirement planning the most seriously around the ages of 40-49.

It’s the realization that says,

“Half my life might be over, and I have very little to show for it!”

If you haven’t yet been hit with that realization, it will come. It’s kind of like presbyopia. “Presby what?!” Well, let’s just say “old people’s eyes.” Somewhere between 40-45 years old, most people are going to have a tough time reading things up close. And you’ll need reading glasses. Just a fact of life. And it’s a humbling experience that I’ve just gone through the past few years. I think reading glasses should come with a financial “how-to” book that helps people understand retirement planning. Because that’s about the same timeframe that most people start really planning for retirement.

I think it helps to remember what’s important, even in the face of a recession and that,

“If it takes change to make our lives better, then we better change!”

There are tons of resources out there of course. Learning from the experience of others can be a valuable source of new knowledge. In the blogosphere an excellent source of insight is the Carnival of Personal Finance hosted this week by Million Dollar Journey.

With an eclectic mix of personal financial advice and interesting stories, there’s something there for everyone. PennyMine talks about Teaching Kids the Importance of a Dollar. Dividends4Life finds Dividend Gold in a Down Market. The Honest Dollar shows us 11 Ways to Trigger an IRS Audit. And The Financial Engineer writes with the economy tanking it’s no time to increase foreign aid by $845 billion dollars. Not really time to increase taxes either…

There we have it. A place to find a beginning, and make a start or new commitment in our own lives. This week I’m committed to finishing our taxes. Now where did I put those reading glasses…

“Keystone: … a central building block; a central cohesive source of support and stability.”

We can use the keystone analogy to think of retirement and the need for a structured financial plan in the years ahead. With a growing retirement keystone in place, we have the ability to achieve our financial goals and shape the direction of our lives.

Social Security is that keystone for many people, but a recent Wall Street Journal/Harris Personal Finance Poll indicates that Fewer Americans Plan to Rely on Social Security in Retirement. That’s good news because it implies that more people think Social Security will simply not be enough and are doing something about it.

Fewer doesn’t mean a majority however:

• 60% of all income and education levels are still planning on Social Security as the primary source of income in retirement.

Lots of folks haven’t even started yet:

• Of all age groups, an average of 24% have not started retirement planning. The number stating they have not started retirement planning is highest for 18-34 year olds at 47%, dropping to 5% for 55 year olds.

A common theme:

• Based on age and marital status, more people indicated they started planning for retirement between ages 40-49.

It’s an excellent article that reveals some interesting generalizations. Pensions, IRA’s, savings, investments and yes, Social Security- all can serve as that retirement keystone. But how many of us really take retirement planning seriously in our early years?

     I was asked recently how someone could really gain financial knowledge… to learn about financial issues, saving, investing and managing finances successfully to achieve a secure retirement.   It’s a question that a lot of us have asked at one time or another in our lives.  Heck, it’s a question we keep asking isn’t it?   Do we ever really know enough?  It seems like the more I do learn, the greater awareness I have for how much I don’t know.  If that makes any sense…

     Sure, some people have an interest or passion for financial issues, and keep after it throughout their lives.  Others just fall into it as a career option, or expansion of business and management.  A good education goes a long way no matter what you do   The statistics specifically show that with increasing education comes increasing wealth.  Knowledge about financial issues often grows with the responsibility for managing that increasing wealth for many people.  Yet for countless millions, financial literacy remains a challenging concept… something that is not “applied” in their lives, and may never really be well understood.    How many bad decisions are made in terms of loans, credit, debt, scams and frauds are tied into lack of awareness and knowledge of financial matters?   

    I am always amazed that we still have enormous numbers of people living in poverty in the U.S.  Take a look at this chart from the U.S. Census Bureau:

     These are statistical numbers based on Census Bureau calculations of Poverty Thresholds.  They are used to calculate a poverty rate and comparisons of the number of people in poverty in the U.S.  The Poverty Thresholds are based on income per family size, and if the income is below the poverty level, then the entire family is considered to be living in poverty.  The official Census Bureau poverty definition is updated for inflation using the CPI, and only uses pre-tax income, not including sources such as capital gains, subsidized housing, food stamps, medicaid, etc. 

    The Poverty Thresholds are different than the U.S. Poverty Guidelines calculated by the U.S. Department of Health and Human Services.  But the Poverty Guidelines are very important, because they are the numbers used to determine qualification for a host of federal programs such as school breakfast and lunch programs, WIC, food stamps, Job Corps, subsidized Medicare, State Children’s Health Insurance programs, Head Start, etc. 

    Regardless of the approach to defining poverty, the results are fairly close:  For a family of four today, they are living in poverty if their annual income is around $20,600 or below.   What if there’s one spouse working at a minimum wage job, the other spouse not working, and two school-age kids?  That’s a pretty difficult economic situation for a family, and they would be challenged to earn more than the poverty level.   What about those living alone?  A one-person household is living in poverty if their income is around $10,000 per year.

     Many of the government programs tied to the poverty guidelines are used primarily by families with children, which brings up an interesting point.  Children under 18 years old have the highest rate of poverty in the U.S.  Some people find that surprising, but it’s not when you think of the number of poor children in some families.  It’s not against the law to be uneducated, to be poor and to continue to have many children, but that is a reality in many parts of the nation… and world of course.  Unfortunately, lack of education goes hand-in-hand with reduced economic well-being, just as we cited the opposite as being a reality:  Greater education results in greater long-term wealth, and fosters improved economic well-being.

Here’s a chart showing historical poverty by age group:

     So it brings up the question of where the poor are getting help in terms of financial knowledge and education?   If someone has very little money and is struggling from paycheck-to-paycheck, how much time do they really have to learn and plan for long-term financial needs?   Probably not much.  Financial planning is simply not going to be the focus for so many struggling families- they are simply trying to make do from month-to-month and survive, especially with children.  And the financial services industry doesn’t really help- everything from brokers, fund managers, financial planners, accountants, financial counselors… what type of clients do they really serve?    Mostly it’s clients with money.   No matter how altruistic their motivations, these professionals are in business to make money.   Sure, there are exceptions such as the many counselors and social workers who do serve lower socio-economic markets and clients, but it’s a challenge, especially with liability insurance and other professional costs of being in business.  

    That’s why I believe so strongly in education and financial literacy.  All the government programs in the world are simply “stop-gap” measures aimed at helping people get by.   People must receive practical, applied training and education in order to pull themselves out of poverty!  The old axiom about teaching someone to fish rather than simply giving them a fish is very true.   The government should give them a few fish along the way, but it is possible to get an education and improve economic well-being.  It is possible to learn how to manage financial matters.  We can help people do that… and make a huge difference in the lives of those in need, especially children.  And we need to start at younger ages… teach children about saving and using money all throughout public school, especially the hazards and use of credit cards and debt.

     And just maybe we are finally looking at these issues as a nation.  Did you know there was a U.S. Financial Literacy and Education Commission?  In 2002 the U.S. Treasury Department established the Office of Financial Education, and soon after created the financial literacy focus.  In 2006, the website MyMoney.gov went live as a place chartered to “provide financial education and resources to all Americans.”  It’s a decent site filled with helpful information and references for many different financial topics.  One of the key strengths of the site is how they’ve integrated government resources such as Social Security information into the topical areas. 

     By the way, what was my answer to the question about how to gain financial knowledge?  Just good ‘ole fashioned effort and discipline primarily.  Take a few classes at a community college or university on budgeting or investings.  Stay away from “get rich quick” ideas and investing seminars.  Read and learn as much as possible… use the internet and the local library for all the fantastic financial books out there.  Stay with it, and keep learning over time.  Meet with an objective fee-only financial planner and talk about the future.  The bottom line and best advice I’ve ever heard?  The simple answer of starting to save and invest as early as possible… Time is on your side if you start young.  It’s hard to make up the older you get.

     I wish there was a better prescription for learning financial  ”stuff” but it just takes time and effort.  How do you do it?  Is it because you enjoy handling financial matters?  What do you think our country can do to improve financial literacy and education in the U.S.? 

    I see financial literacy as an increasing imperative for many nations around the world.  I just don’t think we can leave the details of our financial future up to someone else.  If you’re fortunate to have the resources to let a professional manage your financial well-being, that’s great… but seems to me it’s still important to stay in touch and continue learning along the way, not to mention a responsibility for educating others.   How many billions of dollars are spent providing aid to those who may have been able to do better for themselves, if someone had helped educate them earlier?

     There are many other people that need our help of course, and especially family members who are counting on our knowledge, or at least guidance.  I never even heard of a mutual fund until my father introduced them to me years ago.  If I had followed his advice at the time I would be a lot further ahead right now financially.  But he does receive the credit for pointing me in the right direction.   And I’ve learned something else along the way…. it’s never too late to start!

     Are you a confused investor?  I think we all are sometimes… in the world of money there is always something to learn.  Economics, finance and investing are not static topics, especially as countless laws change every year.  But if the research we read about is true, then as many as half of all Americans find the investing process confusing.   In this Bankrate article, they ask “is the other half lying?“  It’s an excellent point, and probably close to the truth.  Many people don’t realize how complex investing and retirement planning really is, and take much for granted throughout their lives, all the while paying a lot more than they should in fees and other charges.  No surprise, I’ve done the same thing for years.  

     But at some point, in order to acheive any degree of tangible retirement security, you have to start asking questions and begin finding the right answers.  While so many Americans stay confused, guess who benefits?  The financial services industry.  I’m all for businesses making a fair profit, but not at the expense and ignorance of the people the industry supposedly serves!  And who benefts the least?  Those who least understand what they are getting into.  The segment of the population that is at the lowest socio-economic levels.  Is that surprising? Probably not… education is the key to so much in our society, and it’s no different where investing and saving for retirement is concerned.

“In short, it is the lower- to middle-income segment of American society that is in the greatest need of financial planning and investment advice; however, the industry is simply not equipped to deal with this population of underserved people.”  John Grable, Kansas State University

     It’s really all about financial literacy.  Just as reading, writing and arithmetic are the fundamentals at elementary school for our children, financial literacy can serve as leverage for understanding and succeeding in the areas of investing and retirement planning.  Can you do it alone?  Certainly.  But it’s not a simple proposition.  It requires regular education and research, as well as age-old discipline to stay with it.  Some statistics in the article above cite that only 32 percent of investors in America have an IRA.  And only 23 percent have both an IRA and a 401(k)!   According to the Employee Benefit Research Institute (EBRI), the Individual Retirement Account is the single most popular retirement savings vehicle in the country.  Just not enough people are using one, or starting soon enough if they do!  

     When you look at the numbers, it’s actually somewhat scary.  People are starting to realize that they must take charge of their financial future, but we’re not saving nearly enough.  It takes a great many years to accumulate sufficient retirement assets to provide a self-sustaining source of income.  Social Security is counted on by far too many for far too much.  It will probably be around during our lifetimes, but it’s not going to give someone a secure retirement without something else to supplement the income need.   Take a look at this 2007 chart from the EBRI:

    Nearly half of all U.S. workers report savings and investment totals of less than $25,000. And almost 25% of U.S. workers and retirees report having no savings and investments at all!  Admittedly, many of these numbers are skewed to the younger population with older workers normally having more savings assets.  But it’s still not pretty.  We can do something about that… take charge personally and start planning for our future today.  Read and learn, share knowledge with family or friends, and think about the vision you have for the years ahead.   Besides, what is it really about?  It’s about investing in ourselves.  Getting there financially  just takes knowledge, time and a little discipline along the way.  Of course, if you read this far you’re probably way ahead of the pack.  But as we take a few more steps to secure our retirement, maybe we can help someone else learn to do the same.  

     How do you define retirement? How will you finance your retirement? A recent article by SmartMoney.com explores the major themes for those who have retired, or those considering the retirement journey.  The key focus these days seems to indicate that retirement is more like reinventing oneself.  Another definition might be leveraging one’s career and lifestyle for another.  In many cases older adults are continuing to work both for personal goals and financial need.  Whatever the situation, the lives of older adults have as many, if not more, of the concerns and considerations of people at younger ages. 

“People simply aren’t going to retire. They’re going to readjust their lifestyle.”

                                                                                         Harold Evensky

     That quote is pretty self-apparent, but that’s the key… it’s the “readjust” part that most of our questions and challenges are about.  And while the article above makes some excellent points about retirement considerations while managing your financial life, a lot of it is about getting there in the first place.  For many people, retirement is a far off goal, and something they didn’t really consider until middle age.  Like so much in life, it can sneak up on you, especially in terms of financial well-being.   So that’s really the first goal for most of us- ensuring enough money and cash flow is available to meet one’s needs for living expenses.  If cash flow must be increased, many people will certainly be working part or full-time, even during retirement.   The media often paints a rosy picture of the ideal retirement scenario.  I think we must be careful not to judge our situation against a fairy-tale metric that we read about in magazines.  Most people will work hard to have enough cash flow in retirement to meet their needs and goals, but often it’s other factors such as health care, or caring for a spouse or family member that increases our need for money over time.  This article from 2004 offers an excellent look at how to estimate cash flow for retirement.

     Sometimes net worth doesn’t even matter, but rather how much income is coming in on a regular basis to meet your living expenses.   I know of an elderly woman who is land rich.  She sits on more than a million dollars of real estate, but she lives frugally on social security as her only income each month.  Whether she doesn’t really want to sell it, or whether she wants more for the land that it’s worth, I don’t know.  She has not had any serious offers for the land these days, yet turned down a reasonable offer just a few years ago.  At this point, regardless of her real estate wealth, she has very little disposable income to meet her needs. Ideally, as we approach retirement we try to prevent or remedy a scenario that may take place such as this.  And that’s also where a good financial planner can help. 

     Many textbooks and articles cite retirement living expenses as 60% to 80% of pre-retirement living expenses.  That may be true, and it may not.  Each situation is unique, and while one individual or couple may find 60% more than enough, another individual or couple may actually be spending more money in retirement than they did in earlier years.   I think there are a few specific things we should consider before and during retirement:

1. Make a realistic assessment of your financial situation and a needs analysis for retirement.  Look honestly at your net worth, the budget for expected living expenses, and a desired standard of living in retirement.  Conduct an annual review and update the financial need analysis over time.

2. Continue to set aside at least 10% of income for saving and investing throughout our lives.  And work first to achieve an emergency fund of 3-6 months normal living expenses.

3. When considering future withdrawals from investments and savings, think about  how much you’ll need.  Annual withdrawals of no more than 4% of assets are often necessary to fund a lengthy retirement.  Real determination of withdrawal rates and asset comparison must be done with analysis of such factors as life expectancy, forecast cash flow, investment portfolio growth and expected income needs.  But 4% is often a realistic number for many people.

4. As many authors emphasize, diversify financial assets!  If you don’t know how to do that, then read, research or get help.  Diversification is very important.  This site from the SEC  has excellent information for those trying to understand diversification and asset allocation.

    Where do you fit in?  If you’re thinking carefully about your financial needs then you’re probably ahead of the pack.  And there’s lots of help out there. 

• Here’s a great article about strategies for a successful retirement. 

• AARP has excellent resources and information.  

• Two of my favorite sites are RetirementLiving.com and the 360FinancialLiteracy.org retirement section .   

• For social security concerns and information, you can research your expected social security retirement benefits online. 

• There are even inspirational retirement sites such as Retirement With a Purpose.

     Whatever your situation, it’s worth noting that there are many, many other people facing similar challenges and decisions as they approach retirement, and exploring new options in retirement.   Finding ways to increase cash flow is becoming a focus for many businesses, such as those offering reverse mortgages, specialized annuities, etc.  Be careful with whom you do business!  While there are many good companies out there that work with seniors, there are also many unscrupulous individuals.  Just don’t jump into anything without a good second opinion.  I’m a firm believer in finding an independent certified financial planner for a first and second opinion!  The good news is that most people believe their retirement years, even while working in a new field or living a new, sometimes very different lifestyle, is probably the best they’ve experienced in their lifetime.   I don’t know where I’ll be, or exactly what I’ll be doing in the decades ahead.  But suffice it to say that my goals are set to achieve a lifestyle that will meet our needs in a variety of circumstances.  Now all we have to do is work towards them and stay the course.  But having goals in the first place is really important- it helps frame the vision for what we want to achieve.

     P.S. Don’t forget estate planning!  Getting our financial lives in order includes making sure our wills are up-to-date, and that we have thought about what happens after we’re gone.  It will sure make things easier, and less expensive, for family members and others!  Have you heard of the Five Wishes?

        “Are we there yet?”  The ponderings of the market’s gyrations remind me of my son’s questions when we’re in the car.  “How much longer?” he also says.  When we travel together, we have a destination in mind… be that 20 minutes or 2 hours away, and as parents we try to patiently explain that we’re only a little closer than we were five minutes ago!  My wife has given up explaining it to him and simply says “two hours!” regardless of the time left on the trip.  He’s on to her though, and looks to me for a more rational answer.  I play the opposite role and give him a count down over time.  But he likes the game anyway and still asks Mom.  While learning the concept of time, kids struggle to balance their desire to “get there” with little understanding for how long it takes.  Plus, they’re not in the driver’s seat… they’re along for the ride.  

     We could look at it the same way with the market and our savings and investment goals.  Often we’re simply along for the ride, and we struggle to find some reference points or strategy that tells us in what direction the market will head.  We try to understand the concepts and data that influences market and economic dynamics, and how that affects our decisions.  We look for rational answers as to why the market did this, or why the market does that.  Yet I support the view that the market isn’t rational, because it’s involved with people… beyond the fundamentals and technicals, there are a host of emotions and global human interrelationships that influence market direction along the way.  “Are we there yet?” is a refrain I sometimes ask myself too often while checking the progress of stocks and mutual funds.  At those times we may look too closely and worry over short-term moves that make little difference to the goals we have for our future years.   Which brings to mind a favorite quote by Laurence J. Peter:

œIf you don™t know where you™re going, you will probably wind up somewhere else.

And,

“If you don’t know where you’re going, how will you know when you get there?”

    Good question.  If we really don’t know where we are going, then perhaps that’s the first thing we should be asking ourselves.  And if we are not satisfied with the rational answers for market dynamics that meets our need for explanation, then it’s time to look again at why we are in the market in the first place.  We can be in the driver’s seat… and I think that’s where developing financial goals can be extremely valuable.  Defining our financial goals helps in many ways:

• Financial goals provide direction among the constant wrestling between our wants and needs. 

                   “I want to eat out everyday for lunch, but I don’t need to… I can cut back and put that money in my IRA.  Let’s see… Saving $5 bucks a day, for two days a week = $10 a week x 4 = $40 a month deposited to my IRA x 12 months = $480 a year!  x 10 years at 5% = $6,211 !  At 10% that would be $8,194  after 10 years!  Gee… I wonder where else I can cut back?”

• Financial goals provide clarity among the fog of day-to-day issues, and allow us to remember why we are saving and investing. 

                   “Arrgh!  Paying rent for this place is driving us crazy!  I’m glad we’re saving for a down payment for our own house.”

• Financial goals, coupled with discipline and commitment over time, help keep us from making short-term emotional decisions that detract from long-term progress. 

                  “What’s going on with the market!?  Maybe we need to sell before everything crashes!  But wait, we really don’t need that money right now because it’s part of our retirement goals for 10-20 years from now…let’s take a breath for a few weeks and see how it goes.”

• Financial goals serve as a foundation for our overall financial well-being, so we don’t worry so much about short-term changes in market direction.

                  “I don’t know what the market’s doing… but while we work on paying down our debt, our monthly allotment toward investments will continue to make progress, especially in down markets… and it’s done pretty well the last five years, so let’s stay the course for our retirement goals.” 

• More simply, financial goals help us sleep better at night!

     We can be ”drivers” with our financial goals, navigating our way through life to one or more destinations we have in mind.  Markets go up, markets go down… but financial goals while saving, paying off debt and investing really only depend on the fact that markets keep going, and historically have always gone up over the long term.  For me, those goals are not focused on the short term.  While I do “ride” the waves of the market… I still want to stay in the driver’s seat.  Something tells me no one else is going to do it for us.  

* Next week we’ll look at financial goals in more detail.

     Welcome to the 18th edition of the Carnival of Money Stories! We had 28 submissions this week, half of which had stories or a personal twist to provide interest for the Carnival. There were some great submissions! Alas, if the article didn’t share some type of story or dialogue, even remotely… then we couldn’t include it here. On a negative note, we also couldn’t include articles that were the work of others…  some people actually submitted stuff that was reprinted verbatim from other sites, without attribution.  Nothing ruins credibility in blogging and publishing faster than plagiarism, so here’s a call for making sure we respect the work of others and provide proper attribution.  Some sites are like spammers… but they’re really stealing the work of others, and personally it really frustrates me.  So if you’re hosting, I recommend taking a hard look at submissions from sites with no author information, etc.  

Thanks to Andy from Money Walks for asking me to host… I really enjoyed reading the submissions, and thank you all for making the personal finance blogosphere such a vibrant community. Enjoy the Carnival of Money Stories #18!

“The people who get on in this world are the people who get up and look for the circumstances they want, and, if they can’t find them… make them.” George Bernard Shaw

Stephanie at Stop the Ride! talks about those kinds of people with Resourceful West Virginians.

A hearty Congratulations to Lazy Man and his Bride (I’m not calling her lazy!) on their recent wedding… I wish them well with a favorite quote from Sir Winston Churchill:

“There is no doubt that it is around the family and the home that all the greatest virtues, the most dominating virtues of human society, are created, strengthened, and maintained.”

Lazy Man shares how the money adds up… brace yourself for The Cost of My Wedding.

Andrew Tobias once said, “You want 21% risk free? Pay off your credit cards.”

Good advice, but what happens when someone else is using them?!

Tate of Trading Stocks at Self Investors is wrestling with that issue (keep us posted!) in Beware of Credit Card Fraud.

Steve of Debt Free outlines some great preventive ideas in - How to Avoid Credit Card Fraud.

Aristotle once said “We are what we repeatedly do. Excellence then is not an act, but a habit.”

I think Frank from The Happy Rock would agree in It™s Hard Without Habits – July Cash Experiment Update .

Edith also shows us how good financial habits can improve our lives by using the 7 Habits of Highly Effective Money Managers.

“How I Made My Fortune? It was really quite simple. I bought an apple for 5 cents, spent the evening polishing it, and sold it the next day for 10 cents. With this I bought two apples, spent the evening polishing them, and sold them for 20 cents. And so it went until I had amassed a dollar and sixty cents. It was then that my wife’s father died and left us a million dollars.”

Not very likely for most of us! But Millionaire Mommy Next Door talks about how she achieved financial security and happiness in Reader asks, “How exactly did you become a millionaire so young?” .

Silicon Valley Blogger at The Digerati Life makes the Carnival rounds with an excellent view of her 10 Steps To Becoming A Millionaire.

“Before borrowing money from a friend, decide which you need more.“    A. H. Hallock

But what if you’re borrowing money from yourself?

Paul at ExtremePerspective is asking for opinions with a question, Why Not Borrow Against 401k?.

“Develop an attitude of gratitude… knowing that every step forward is a step toward achieving something bigger and better than your current situation.” Brian Tracy

Betsy of Money Changes Things helps us remember that a little perspective (and money) goes a long way in Gratitude and the Garage Door Opener. (I’m glad I have one of those little red handle thingies as a back up!)

œQuality in a product or service is not what the supplier puts in. It is what the customer gets out and is willing to pay for. A product is not quality because it is hard to make and costs a lot of money, as manufacturers typically believe. This is incompetence. Customers pay only for what is of use to them and gives them value. Nothing else constitutes quality. Peter F. Drucker

David of MoneyNing discusses his views of customer service practices with Coca Cola vs TD Ameritrade – Company Efficiencies.

“Nothing is to be more highly prized than the value of each day.” Goethe

Mr. Credit Card has a great attitude in testing that premise with

Missed My Airline Flight and Threw Away Money!

“If every fool wore a crown, we should all be kings.” Welsh Proverb

We’ve all been there in one way or another, and Moorea of Queercents shares her past with some insight on How to Undo a Wedding.

Ralph Waldo Emerson said it simply when he wrote, “The first wealth is health.”

Who could disagree with that wisdom? Certainly not FitBuff as he ponders the legislative efforts in the UK for a proposed “fat tax” in How Much Are You Willing to Pay for Twinkies? .

That’s it for this week’s edition of the Carnival of Money Stories. Thanks to all the contributors! I didn’t have a story today, but I will share one of my favorite quotes by Authur Gordon:

“Love life. Be grateful for it always. And show your gratitude by not shying away from its challenges. Try always to live a little bit beyond your capacities. You’ll find that you never succeed.”

The next edition of Money Stories will be hosted Monday, July 23rd at Investor Trip  Dough Roller. You can submit your money stories to the Carnival here.

There’s some terrific content and insight at the 91st Carnival of Personal Finance hosted by The Sun’s Financial Diary.  I continue to be amazed at the diversity of topics and information presented.  Invariably I find something that discusses a recent concern or interest.  Even some topics a little beyond my expectations… but that’s what makes blogging such an effective medium.  Some interesting posts on financial planning, and planners.  But what really is a financial planner?  I have noticed that a lot of personal finance readers really don’t understand the difference between a real Financial Planner and someone who is a broker, financial advisor, financial consultant, etc.  Some people think a Certified Financial Planner is a designation you can send for in the mail… without much educational background.  Nothing could be further from the truth!   I think the problem is that so many institutional firms are employing “financial whatever” people to target the demographic markets and troll for business.  Unfortunately, those who have taken the time and effort in both education and years of training to attain Certified Financial Planner designation are competing against those large firms for business, with an unwary public being confused, and sometimes hurt financially, in the process.  Folks, if someone is trying to sell you a product instead of speaking objectively about your financial concerns and how they can help you attain your goals… then you are probably not speaking with a real Financial Planner.   Real Financial Planners are trained in far more than simple investing and managing money.  They have education and experience with many other issues such as taxation, estate planning, family finanicial matters, budgeting, retirement and even real estate considerations.  If you’re in doubt about who you are talking with, ask about their credentials and designations… ask about their education… ask about the Code of Ethics they adhere too.   Fee-only Financial Planning from a designated CFP is probably about as close as you can get to objective advice.  Getting that advice from someone or a some company who is in business to charge fees and commissions to clients probably involves competing priorities.  Not always, but if someone makes their living by selling things to you, how strongly will they encourage you to buy something from a different firm if that’s what fits?   Do you like feeling “tied” to one institution or company?  I don’t… I would rather get good advice to help make timely decisions… and then receive recommendations about options.  I don’t want to have to buy a stock or fund from a financial “whatever” person I’m talking to- I should be able to do that almost anywhere, but receive solid, objective advice before doing so.  I think it’s so important do a little background research before you put your money on the table…. Financial Planning is a comprehensive discipline and you should have someone with comprehensive experience giving advice.  With that in mind, to find a Certified Financial Planner in your area that meets your needs, see the Financial Planning Association’s search tool.

     Market madness this week.  Oh wait… did I say “madness”?  Isn’t that a term we usually hear when the bull is running, the market frothing with speculators and way overvalued?  Madness can be seen on both sides of the spectrum however. When the bears emerge from hibernation the emotions can also run at a fever pitch.  This was a tough week, but certainly not madness.  At least not yet.   We’ve seen it… and for me this isn’t it.  But lets be clear- I’m not a trader.  I am an investor who trades part-time when perceived opportunity arises, or when necessary.  Is it necessary now?  For me, no. For many others-absolutely.

     The beauty of the market is we must each wrestle with our emotions, our conscience, our judgement and yes, the beast itself.  I have overestimated myself before, and underestimated myself before, and the only thing I’m certain of is that I’ll probably do it again.  I learned a long time ago while flying airplanes that usually in an emergency the best thing to do is… nothing.  At first.  The absolute first thing you do is to not make things worse. 

     How might someone make things worse in today’s market climate?  I think reacting emotionally by liquidating all one’s assets could be an over-reaction.  If the individual felt it necessary to do so, then fine.  But if being in cash was the limit of their tolerance for risk, then perhaps they shouldn’t have been in the market in the first place.  And it’s certainly not a road to the achievment of wealth.  Do you try to time the market?  Sometimes?  Sure.  I’ve done it successfully at times, and miserably as well.  I personally believe market timing for the amateur investor is one of the worst destroyers of wealth.   “The market’s going down!  Quick- sell all the stocks! Liquidate the IRA!  Sell the mutual funds!”  An over-reaction?  Yes.  But I’ll bet it happens a lot more often than we admit. 

     I remember long ago while sitting in a classroom receiving some kind of flight-related instruction… the year was 1987.  In the middle of some boredom-inducing lecture someone was screaming and yelling while running down the hallway.  “What the heck is that all about?” I wondered.  He stuck his head in the doorway, wide-eyed with a look of fear and powerlessness… “The market’s crashing!”  and ran on to the next room down the hall.   “Hmmm…” I remember thinking, “I don’t have much anyway… so I’m not going to worry about it.”  I didn’t feel that the market and its risk pertained to me.  Honestly, I didn’t really care and didn’t know much about it.  Ignorance is bliss.  I remembered that scene however, and for a long time after I’ve wondered what that guy was investing in that drove such fear and emotion to the surface that day. 

     But I certainly care now. I’m part of the beast and the beast will set me free… eventually.  And because I care I want to make an informed decision before I react emotionally.  If I make a decision that loses money, so be it- I did the best I could.  I’ll learn from it and move on.  I recently read something I think has value:

“I understand the frustration of making the wrong choice & not researching enough only to find out later that you could have done it differently.  That said you have to acknowledge and move on and make your changes from where you are, and not what could have been.  I have been going in a new direction rather than to back-track and waste money undoing what I have already done.  There are always options and alternatives.  We all make choices every day and live with them, good or bad.  Acknowledge and Move on.  I do not waste any time on a bad choice and decision. Whats done is done & just move on from here.  Life is too short and just too much fun to waste on disappointments we all come up against. The alternative to these issues are simple and rather cheap and in the long run probably better.  Look for the strength in things rather than the weakness.   If you change your perspective you can be very pleased with your choices.”   Timber

Pretty darn good advice.  And it came from one guy helping another guy feel better about his buying decision… and the price he paid… he recently bought a new John Deere tractor.

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